US 'Economic Stimulus' Budget Review

[LittleGrizzly]

That FDR lengthened the depression through really stupid actions is a matter of historical economical fact.

http://en.wikipedia.org/wiki/New_Dea...the_Depression

Prolonged/worsened the Depression
A number of economists believe the New Deal delayed economic recovery.[52] A 1995 survey of economic historians asked whether "Taken as a whole, government policies of the New Deal served to lengthen and deepen the Great Depression." Of those in economics departments 27% agreed, 22% agreed 'with provisos' (what provisos the survey does not state) and 51% disagreed. Of those in history departments, only 27% agreed and 73% disagreed.

A matter of historical fact for the economists you cited perhaps but its not everyone else's historical 'fact'. There is no wde ranging agreement on the matter and according to these figurers a higher percentage don't think FDR's policys served to lengthen and deepen the great depression. With the figures in even higher disagreement for historians probably because they look at the comparison with other allied countries who were determined to stick with smith's policys and had to wait for rearmement for WW2 before they're recovery began whereas US started recovering sooner...

[Lemur]

A matter of historical fact for the economists you cited perhaps but its not everyone else's historical 'fact'.

But ... but two UCLA economists wrote a paper saying otherwise! Do you understand? Not one, but two!

[Crazed Rabbit]

A matter of historical fact for the economists you cited perhaps but its not everyone else's historical 'fact'. There is no wde ranging agreement on the matter and according to these figurers a higher percentage don't think FDR's policys served to lengthen and deepen the great depression. With the figures in even higher disagreement for historians probably because they look at the comparison with other allied countries who were determined to stick with smith's policys and had to wait for rearmement for WW2 before they're recovery began whereas US started recovering sooner...

That survey was almost a decade before the paper came out, and since then there's been more research done on the topic. It is pretty much fact.

Bernanke, chairman of the federal reserve, believes it (The Fed) played a key role in causing the depression (He actually apologized for it).

There are many others, like Milton Friedman, who hold the same views:

"Admirers of FDR credit his New Deal with restoring the American economy after the disastrous contraction of 1929—33. Truth to tell–as Powell demonstrates without a shadow of a doubt–the New Deal hampered recovery from the contraction, prolonged and added to unemployment, and set the stage for ever more intrusive and costly government."
–Milton Friedman, Nobel Laureate, Hoover Institution

As the great American economist Irving Fisher

Oh, that partisan Kruggy. There's a really funny quote from Fishing from 1929 (80 years ago!) - anyone care to guess what he says?

But ... but two UCLA economists wrote a paper saying otherwise! Do you understand? Not one, but two!

Oh my, what a rebuke! Truly, I wish I had a partisan website where the author could regurgitate leftist talking points and put up two graphs that ever so neatly go along with what he says! Truly, I am undone for relying on such fools as published economists and not a partisan blogger!

CR

[LittleGrizzly]

There are many others, like Milton Friedman, who hold the same views:

Milton Friedman is a huge adovocate of smith's theory's, he was keynes rival back in the day, not that he's not a great economist (he is, from what i have read) but he is someone who is going to disagree, i actually read a little bit of his view's and he was of the opinion that the reason for the depression in the first place was hoover not actually following smith's free market ideals...

That survey was almost a decade before the paper came out, and since then there's been more research done on the topic. It is pretty much fact.

The facts of the matter are America recovered quicker than other allied countries which where following smith's ideal of the free market, these countries continued in a slump until they began rearming. Im sure there are parts of FDR's new deal which did actually cause harm, but it is arguable that the new deal actually lengthend the depression or shortened it, various brilliant economists such as Friedman and Keynes have argued differing views and i would say it is difficult to pick one or the other as 'fact'

[LittleGrizzly]

If you want some economists who disagree...

http://mediamatters.org/items/200901080005

extracts from article...

He later asserted that "President Roosevelt waged what could only be called a jihad against private enterprise." However, Hume's assertion that "the New Deal failed" has been flatly rejected by some prominent economists, including Nobel Laureate Paul Krugman, who has said that Roosevelt did not go far enough to end the crisis and that his attempts to balance the budget hindered recovery.

In a November 10, 2008, New York Times column, Krugman wrote that Roosevelt's policies included "long-run achievements" that "remain the bedrock of our nation's economic stability" and that Roosevelt's short-term successes were constrained because "his economic policies were too cautious."
Krugman further wrote:

Now, there's a whole intellectual industry, mainly operating out of right-wing think tanks, devoted to propagating the idea that F.D.R. actually made the Depression worse. So it's important to know that most of what you hear along those lines is based on deliberate misrepresentation of the facts. The New Deal brought real relief to most Americans.

During a roundtable discussion on ABC's This Week on November 16, responding to Washington Post columnist George Will's assertion that "the first New Deal didn't work," Krugman stated, in part: "Roosevelt got the economy moving somewhat. By 1937, things were a lot better than they were in 1933." He continued, "Then he was persuaded to balance the budget, or try to, and he raised taxes and cut spending and the economy went back down again. And it took an enormous public works program known as World War II to bring the economy out of the Depression."

It is a commonly accepted fact that wars, get economys going, it is only sensible to assume you can have an even greater effect if instead of using it all to wage a war you use all the spending on improving infrastructure and the economy in general...

Similarly, in a January 6 column, Dean Baker, co-director of the Center for Economic and Policy Research, wrote: "In reality, any careful reading showed that the New Deal policies substantially ameliorated the effects of the Great Depression for tens of millions of people. The major economic failing of the New Deal was that President Roosevelt was not prepared to push the policies as far as necessary to fully lift the economy out of the Great Depression." Baker continued:

Roosevelt was too worried about the whining of the anti-stimulus crowd that he confronted. He remained concerned about balancing the budget when the proper goal of fiscal policy should have been large deficits to stimulate the economy. Roosevelt's policies substantially reduced the unemployment rate from the 25 percent peak when he first took office, but they did not get the unemployment rate back into single digits.

Further, in a November 17 post on his personal blog, University of California-Berkeley economics professor Brad DeLong wrote, "Private investment recovered in a very healthy fashion as Roosevelt's New Deal policies took effect. The interruption of the Roosevelt Recovery in 1937-1938 is, I think, wel [sic] understood: Roosevelt's decision to adopt more 'orthodox' economic policies and try to move the budget toward balance and the Federal Reserve's decision to contract the money supply by raising bank reserve requirements provide ample explanation of that downturn."

Even the federal reserve chair, someone appointed by George Bush

Progressive economists are not alone in crediting Roosevelt's policies for easing the economic crisis. As Newsweek senior editor Daniel Gross noted on his blog on January 4, 2007, Federal Reserve Chair Ben Bernanke -- appointed by President George W. Bush -- wrote in his Essays on the Great Depression, "Only with the New Deal's rehabilitation of the financial system in 1933-35 did the economy begin its slow emergence from the Great Depression."

This is with just a quick look, stating such things as facts is simply right wing propaganda, there is argument among economists over the issue, only those with a view to push would tell you otherwise...

[Don Corleone]

I think what everyone is failing to recognize is that when you look at Keynsian economic theory (and it's latest prophet, Paul Krguman) or the Austrian school (ala Milton Friedman), you have two inherently different definitions of success.

Folks on the Austrian side look at wealth generation. Folks on the Keynsian side look at standard of living. Neither are wrong, but when you argue back and forth over who's correct, you have to understand it's an apples & oranges argument.

One thing I don't think Paul Krugman is being completely forthwright on is that the methods of GDP stimulus advocated by Keynes were never intended to be long term strategic policies: by Keynes or by FDR for that matter. Even FDR's crown jewel, social security, was meant to be a stop gap measure until pensions and personal savings could accrue to a point where people could look to their own needs.

You don't win an argument on which is better: Capitalism or Socialism, because they argue different points. I'd even go so far as to say the two are not necessarily mutually exclusive. But sound-byte economics, as practiced by politicians, the media, and yes, here in our beloved Backroom, benefit nobody.

One thing I find amazing as I go reading up on 1930's era economics... even a so-called dyed in the wool demand-sider like FDR, a blind adherent who zealously followed Keynes' most radical theories, understood that defecits by the Federal government trash the credit market in the long run in ways that make them inherently dangerous.

Is there anybody, in either party, who would actually commit to National Debt reduction? Is there any hope that your average American can move beyond the current levels of ignorance to understand the toll defecits and national debts take on your long term prosperity, and demand an end? Or at the end of the day, have we decided to just say " the kids, I'm going to get mine..."

Do larger European governments like France, Germany and UK keep large debts on the books?

[LittleGrizzly]

I would like to point out that im not arguing one that one is better than the others... they both have thier own benefits... and i would personally say that each has its benefits and using a cycle of both, saving a little in the good times and investing in the bad is the best way imo...

One thing I find amazing as I go reading up on 1930's era economics... even a so-called dyed in the wool demand-sider like FDR, a blind adherent who zealously followed Keynes' most radical theories, understood that defecits by the Federal government trash the credit market in the long run in ways that make them inherently dangerous.

FDR actually wanted a conservative budget, it is why he slashed spending and increased prices quite quickly (in one of the quotes in my post above)

Do larger European governments like France, Germany and UK keep large debts on the books?

I know the UK has a fairly sizeable one... i now its smaller but im not sure how it compares to the size of our economy in contrast to yours..

I agree to many are far too selfish these days, we should save a little and get rid of previous debts in the good times, and then invest the savings and build up small debts in the bad times...

[Husar]

Well, on that one TV show(not that much of a show, more like a science and everything around it kind of program) they said at the moment every eigth tax Euro in Germany goes to paying the interest of our national debt. I think that sounds like a huge debt, in fact it's over a trillion euros IIRC, they also showed that there.
the government had this plan to somehow be debt-free by 2012 or so but it looks like the recession etc. delayed that until about 294768, including all future delays of course.

[Crazed Rabbit]

The facts of the matter are America recovered quicker than other allied countries which where following smith's ideal of the free market, these countries continued in a slump until they began rearming. Im sure there are parts of FDR's new deal which did actually cause harm, but it is arguable that the new deal actually lengthend the depression or shortened it, various brilliant economists such as Friedman and Keynes have argued differing views and i would say it is difficult to pick one or the other as 'fact'

Oh really? Wikipedia suggests otherwise;

The massive rearmament policies to counter the threat from Nazi Germany helped stimulate the economies of Europe in 1937-39. By 1937, unemployment in Britain had fallen to 1.5 million. The mobilization of manpower following the outbreak of war in 1939 finally ended unemployment.

http://mediamatters.org/items/200901080005

extracts from article...

That place is absolutely nothing more than a parroting of left wing democrat talking points.

In a November 10, 2008, New York Times column, Krugman wrote that Roosevelt's policies included "long-run achievements" that "remain the bedrock of our nation's economic stability" and that Roosevelt's short-term successes were constrained because "his economic policies were too cautious."

Krugman long ago divorced his writing from economic facts and joined it instead with partisan pandering.

Most importantly, all he does here is talk - that is nothing compared to the actual research that was done by the two economists at UCLA. Partisan diehards will always fight what they oppose, no matter the facts.

Progressive economists are not alone in crediting Roosevelt's policies for easing the economic crisis. As Newsweek senior editor Daniel Gross noted on his blog on January 4, 2007, Federal Reserve Chair Ben Bernanke -- appointed by President George W. Bush -- wrote in his Essays on the Great Depression, "Only with the New Deal's rehabilitation of the financial system in 1933-35 did the economy begin its slow emergence from the Great Depression."

The author is a deceiver or a fool. Here is what Bernanke said:

Their argument, in short, is that under institutional arrangements that existed before the establishment of the Federal Reserve, bank failures of the scale of those in 1929-33 would not have occurred, even in an economic downturn as severe as that in the Depression

....

For practical central bankers, among which I now count myself, Friedman and Schwartz's analysis leaves many lessons. What I take from their work is the idea that monetary forces, particularly if unleashed in a destabilizing direction, can be extremely powerful. The best thing that central bankers can do for the world is to avoid such crises by providing the economy with, in Milton Friedman's words, a "stable monetary background"--for example as reflected in low and stable inflation.

Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again.

CR

[Lemur]

Krugman long ago divorced his writing from economic facts and joined it instead with partisan pandering.

Didn't he win a Nobel Prize for economics last year?

If he's a hack, what does it take not to be a joke in your book, CR?

[Crazed Rabbit]

Didn't he win a Nobel Prize for economics last year?

If he's a hack, what does it take not to be a joke in your book, CR?

Oh, I'm sorry, did he win the Nobel for his opinion column?

CR

[Lemur]

He won it for work in "economic science," which seems to be not unrelated to (a) his column subject, and (b) what we are discussing.

Does a Nobel laureate in economic science need to agree with you to not be a hack?